The concept of entrepreneurship in the smart economy

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THE CONCEPT OF ENTREPRENEURSHIP IN THE SMART ECONOMY

Iryna Zarytska

PhD in Economics, Senior Lecturer of International Economics Department, Kyiv National Economic University named after V. Hetman, e-mail: zia_2006@ukr.net

Svitlana STRELNYK

PhD in Economics, Associate Professor of International Economics Department, Kyiv National Economic University named after V. Hetman, e-mail: strelnyk@kneu.edu.ua

Abstract

The article analyzes entrepreneurship as a catalyst for the economy development in terms of the prospects for sustainable development. It is justified that development of entrepreneurship in the smart economy is achieved by a comprehensive modernization and innovative updating of business on the basis of a new generation of technologies; providing high value-added, energy efficiency; forming a secure environment and social stability. It is proposed to stimulate entrepreneurship in order to promote stable development of economy by understanding the mechanism of increasing social concerns about the working conditions, social welfare and the environment security and therefore providing the sustainable development strategy.

Keywords: entrepreneurship; SMART economy; shared value creation; innovations.

Zarytska, I., Strelnyk, S. (2017). The concept of entrepreneurship in the smart economy. Ed.: M. Zveryakov (ed.-in-ch.) and others [Kontseptsiia pidpryiemnytstva u smart (rozumniy) ekonomitsi; za red.: М. I. Zveriakova (gol. red.) ta in.], Socio-economic research bulletin; Visnik social'no-ekonomicnih doslidzen' (ISSN 2313-4569), Odessa National Economic University, Odessa, No. 1 (62), pp. 16-22.

Date of acceptance: 26.01.2017.

Ірина Анатоліївна ЗАРИЦЬКА

кандидат економічних наук, старший викладач кафедри міжнародної економіки, ДВНЗ «Київський національний економічний університет ім. В. Гетьмана», e-mail: zia_2006@ukr.net

Світлана Олександрівна СТРЕЛЬНИК

кандидат економічних наук, доцент кафедри міжнародної економіки, ДВНЗ «Київський національний економічний університет ім. В. Гетьмана», e-mail: strelnyk@kneu.edu.ua

КОНЦЕПЦІЯ ПІДПРИЄМНИЦТВА У СМАРТ (РОЗУМНІЙ) ЕКОНОМІЦІ

Зарицька, І. А., Стрельник, С. О. Концепція підприємництва у смарт (розумній) економіці //Вісник соціально- економічних досліджень: зб. наук. праць; за ред. М. І. Звєрякова (голов. ред.) та ін. (ISSN 2313-4569). - Одеса: Одеський національний економічний університет. - 2017. - № 1 (62). - С. 16-22. innovative business economy technology

Анотація. У статті проаналізовано підприємництво як каталізатор розвитку економіки з точки зору перспективи сталого розвитку. Обґрунтовано, що розвиток підприємництва в умовах розумної економіки досягається за рахунок комплексної модернізації та інноваційного оновлення бізнесу на основі нового покоління технологій, забезпечуючи високу додану вартість, ефективність використання енергії, формування безпечного середовища та соціальної стабільності. Пропонується стимулювати розвиток підприємництва, сприяючи стійкому розвитку економіки за рахунок розуміння механізму соціальних проблем, умов праці, соціального забезпечення та безпеки навколишнього середовища і, отже, забезпечуючи стратегію сталого розвитку.

Ключові слова: підприємництво; розумна економіка; створення загальної цінності; інновації.

Ирина Анатольевна ЗАРИЦКАЯ

кандидат экономических наук, старший преподаватель кафедры международной экономики, ГВУЗ «Киевский национальный экономический университет им. В. Гетьмана», e-mail: zia_2006@ukr.net

© ZARYTSKA I., STRELNYK S., 2017Светлана Александровна СТРЕЛЬНИК кандидат экономических наук, доцент кафедры международной экономики, ГВУЗ «Киевский национальный экономический университет им. В. Гетьмана», e-mail: strelnyk@kneu.edu.ua

КОНЦЕПЦИЯ ПРЕДПРИНИМАТЕЛЬСТВА В СМАРТ (ИНТЕЛЛЕКТУАЛЬНОЙ) ЭКОНОМИКЕ

Зарицкая, И. А., Стрельник, С. А. Концепция предпринимательства в смарт (интеллектуальной) экономике // Вестник социально-экономических исследований: сб. науч. трудов; под ред. М. И. Зверякова (глав. ред.) и др. (ISSN 2313-4569). - Одесса: Одесский национальный экономический университет. - 2017. - № 1 (62). - С. 16-22.

Аннотация. В статье проанализировано предпринимательство как катализатор развития экономики с точки зрения перспективы устойчивого развития. Обосновано, что развитие предпринимательства в условиях интеллектуальной экономики достигается за счет комплексной модернизации и инновационного обновления бизнеса на основе нового поколения технологий, обеспечивая высокую добавленную стоимость, эффективность использования энергии, формирование безопасной среды и социальной стабильности. Предлагается стимулировать развитие предпринимательства, способствуя устойчивому развитию экономики за счет понимания механизма социальных проблем, условий труда, социального обеспечения и безопасности окружающей среды и, следовательно, обеспечивая стратегию устойчивого развития.

Ключевые слова: предпринимательство; интеллектуальная экономика; создание общей ценности; инновации.

Post-industrial economy or knowledge economy is not the highest degree of economic science. New concept of smart economy is being reflected in the numerous works of researchers increasingly frequent as the next stage of evolutionary concepts of economic knowledge.

Latest research and publications analysis

Among authoritative authors who have studied the issue of smart economy and corporate social responsibility (CSR) are worth noting Doran, George (2008), Brito (2011), Porter (2011), Kramer (2011), and others. However, in literature insufficient attention is paid to the proximity between the concept of “smart economy” and entrepreneurship.

Considering this, research purposes of the article are: to generalize modern approaches to the definition of smart economy and smart entrepreneurship; to study winning partnership in shared value creation and define key success factors for smart business in the context of increasing social concerns about the corporate behavior regarding human rights, working conditions, social welfare and the environment security and therefore in terms of sustainable growth paradigm domination.

Key results reasoning

Smart economy is believed to be based on a comprehensive modernization and innovative development of all sectors on the basis of a new generation of technologies; providing high value- added, energy efficiency; forming a secure environment and social stability. The main components of the smart economy are:

educated workers;

effective entrepreneurial culture;

infrastructure to the widespread introduction of new technologies and networks;

low production costs;

implementation of the principles of “green economy”;ISSN 2313-4569 Вісник соціально-економічних досліджень, № 1 (62), 2017

ensuring social protection.

Nowadays there is a strong society request for responsible business behavior that in consequences of increasing global competition and restrictions for production costs minimization bring to life new business concept - Shared Value Creation. This concept bases on the win-win principle, helps companies to win in non-price competition and provide unique goods/services to their clients creating shared value that closely correlates with the principles of Sustainable growth and Smart economy. A shared value approach reconnects company success with social progress. It opens managers' eyes to immense human needs that must be met, large new markets to be served and the internal costs of social deficits. It will require managers to develop new skills and knowledge, and governments to learn how to regulate in ways that enable shared value, rather than work against it. Enterprises can do this in three ways:

reconceiving products and markets;

redefining productivity in the value chain;

building supportive industry clusters at the company's locations [1].

A number of companies (e.g. Wal-Mart, Nestle, Johnson & Johnson, Unilever) already have important initiatives in these areas.

An organization's evolution into a social business deals with the internal transformation of an organization and addresses key factors such as organizational models, culture, internal communications, trainings, global and technology expansion, employee involvement [2].

To do this effectively, enterprises have to get smarter. Smart way to do business acquires new technologies, intelligence, and talent. They have to change the way they do business - and that starts with the people of the organization, especially with the leaders who represent the brand. If the entire organization can be convinced that a smart business is a social business that builds processes, infrastructures, and programs with the customer in mind, it will begin to see positive change both internally and externally.

Smart enterprises are not only listening to their customers; they are innovating and changing their products and services as a result of their feedback.

Companies should build a culture of learning. Tools are changing, networks are merging and consumer behavior is constantly evolving. Companies need to stay ahead of the game, and, to do this, they must get smarter. This requires training and organizational development. This evolution to a smart business does not happen overnight. It is not a button that can just be turned on. It is a process that can take years and that requires training and intelligence.

Smart way to do business involves settings of the right goals and objectives. These should be measurable targets in achieving a particular task and closely aligned with the mission. This is so called SMART framework for goals [3]:

specific (goals must be simple and specific);

measurable (goals must be measurable so that the company can determine whether the goal was met);

achievable (this aspect might require a look back at historical data, such as growth rates or previous sales revenue);

relevant (goals must be tightly integrated with the mission);

time-specific (goals must have a limit for achievement).

Nothing differentiates an enterprise from its competitors more than positive customer reviews. The competitive landscape is growing, and new products are coming to market every day. That is why companies need to create a groundswell of loyal customers. If they can spend more time valuing their customers, their customers will value them back. Tapping into the emotional equity of customers will result in a long-term relationship with them. Smart enterprises (e.g. Dell, Starbucks,Lego) are doing this successfully and changing the customer experience for the millions of people. Thus, today's business environment is characterized by more powerful competitors, more sophisticated and selective customers. In this climate, companies that work “smarter” have a competitive advantage. Rather than react to crises and opportunities, these organizations anticipate them. They see opportunities before the competition; identify problems before they escalate into crises; and reengineer internal processes, products, and services to enhance customer satisfaction and loyalty.

In order to stimulate CSR activities and celebrate companies' achievements in the field of shared value creation governments and NGOs have established various Award Schemes. For example, the State Department (USA) has established Award for Corporate Excellence (ACE) [4] in 1999 in order to recognize the important role that U.S. businesses play abroad as good corporate citizens. The Award is aimed to send a strong signal of the Department's commitment to further CSR, innovation and exemplary practices. It highlights increasing outreach to the business community, public-private partnerships and recognizes the contributions that business makes to improving lives worldwide: 2014 winners - EcoPlanet Bamboo Group, Nicaragua; Wagner Asia Equipment, LLC, Mongolia; Coca-Cola Company, Philippines; 2013 winners - Taylor Guitars, Cameroon; Fruit of the Loom, Honduras; Plantronics, Mexico; 2012 winners - Sorwathe, Rwanda; Intel Corporation, Vietnam; 2011 winners - Sahlman Seafoods, Incorporated, Nicaragua; Procter & Gamble, Nigeria; Procter & Gamble, Pakistan [5].

Nevertheless EU can fairly be considered as a world leader in the field of shared value promotion as this concept has found its reflection in various European documents such as Horizon 2020, a renewed EU strategy 2011-2014 for Corporate Social Responsibility and many others. First European CSR Award Scheme (The first European CSR Award Scheme celebrates CSR partnerships from across 30 countries, with a focus on impactful and innovative collaboration) was launched in 2012, funded by the European Commission, led by CSR Europe and Business in the Community and supported by Alliance Boots. It rewards winning partnerships in two different categories, small and medium-sized enterprises and large companies in partnership with at least one non-business stakeholder. European CSR Award Scheme celebrates CSR excellence, innovation and sustainability.

The European CSR Award Scheme winners in 2013 represent the majority of industry sectors which demonstrates that all businesses, regardless of sector, are ready and able to play a proactive role in addressing current and future sustainability challenges. It shows that while 71.5% of winning entrepreneurship initiatives concentrates on community development as a key sustainability issue and 44.5% of the projects address the topic of the environment [6].

The selection of topics also shows that entrepreneurship partnerships tend to tackle multiple social issues (Tab. 1). There is also an increasing trend in EU to align partnership activities with companies' core business. Such strategies offer more opportunities to create high quality sustainable contributions to society, and in return bring value to the business.

Table 1 - European entrepreneurship winning partnerships in shared value creation

Source: [7]

Conclusions

The above exciting and pioneering initiative focuses on successful partnerships between business and non-business organizations, with particular emphasis on collaborative programs that promote sustainability through innovation thus creating shared value. Thereby such smart way to do business lays the foundation for Smart economy promotion by increasing a number of educated workers, facilitating effective entrepreneurial culture, implementation of the principles of “green economy” and ensuring social protection.

References

1. Smart Growth is Smart Business Report (2004). Smart Growth Leadership Institute, NALGEP.

2. Brito, M. (2011). Smart Business, Social Business: A Playbook for Social Media in Your Organization. Pearson Education, 272p.

3. Doran, George T. (2008). There's a SMART way to write management's goals and objectives, Management Review 70.11 (Nov. 1981): 35, Business Source Corporate.

4. Secretary of State's Award for Corporate Excellence. URL: http://www.state.gov/e/eb/eppd/csr.

5. Corporate Social Responsibility (2015). The State Department USA. URL: www.state.gov.

6. European CSR Awards Projects 2013 - Goldenbook (2014). European Commission, Brussels, 214p. URL: http://www.europeancsrawards.eu/wp-content/uploads/2013/06/Goldenbook.pdf.

7. Chaban, T., Zarytska, I. (2015). Transformation of the corporate social responsibility's essence in the context of sustainable development concept domination [Transformatsiia sutnosti korporatyvnoi sotsialnoi vidpovidalnosti v konteksti dominuvannia kontseptsii staloho rozvytku], Aktualniproblemy ekonomiky, No. 12 (174), s. 266-279 [in Ukrainian]

8. Die besten Forex undBinar broker. URL: http://www.europeancsrawards.eu/about-the-awards.

9. A renewed EU strategy 2011-2014 for Corporate Social Responsibility (2011), European Commission. COM (2011) 0681 - Communication from the commission to the European parliament, the council, the European economic and social committee and the committee of the regions, Brussels, 15 p. URL: http://www.ipex.eu/IPEXL-WEB/dossier/document/ COM20110681.do.

10. General Union Environment Action Programme to 2020: Living well, within the limits of our planet (2014). European Commission, Luxembourg: Publications Office of the European Union, 92 p. URL: http://bookshop.europa.eu/en/general-union-environment-action-programme-to- 2020-pbKH0113833.

11. Green paper - Promoting a European framework for corporate social responsibility (2001). European Commission. COM (2001) 0366 - Communication from the commission to the European parliament, the council, the European economic and social committee and the committee of the regions, Brussels, 32 p. URL: http://eur-lex.europa.eu/legal-content/EN/ TXT/?uri=CELEX:52001DC0366.

12. Porter, M. E., Kramer, M. R. (2011). Creating Shared Value, Harvard Business Review. January-February issue. URL: https://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/1.

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